First there was «Brexit», then the victory of Republican Donald Trump. Will the decision to Italy next shock to the political establishment?
As you know, this Sunday in Italy held a referendum in which residents can vote for - which would very much like the European officials - the resignation of the current Prime Minister, which may cause a banking crisis and, ultimately, lead to withdrawal from the the composition of the euro area.
Concern is growing among investors. The yield on 10-year government bonds of the country has jumped in recent weeks more than 2%. At this time, the yield on German debt is only 0.3%. Such investor behavior reflects their opinion that many market participants believe that this country is a huge risk for the euro area.
Italians will vote "for" or "against" a series of constitutional reforms, which so defends Prime Minister Matteo Renzi. According to him, these changes are vital and will help put an end to a protracted political crisis in the country and revive the national economy, and promised to resign if voters do not support these reforms.
Earlier it was reported that unemployment in the euro zone about 7-year low.
The immediate risk is related to the country's troubled banks, the amount of non-performing loans which have already been reached about € 360 billion ($ 383 billion), which is one third of the total of all banks of the euro area.
If Renzi fulfill its promise and resign, the country can expect new elections to the local parliament.
"Thus, a political crisis can open a big can of worms in Italy", - noted Berenberg economists. Almost 40% of Italians are not satisfied with the policy of the EU, according to a poll Pew Research Center.
However, analysts generally agree that Italy is likely not will raise the question of the exit from the currency bloc."In the end, the probability that Italy will be released from the euro zone is very low," - wrote in a note to clients Holger Schmieding, chief economist at Berenberg Bank.
Based on materials WELTRADE
